Wednesday, October 15, 2008

Stocker Market -- Position Overview

Our recent newsletter, dated September 10th, stated that household spending is likely to be flat-to-down in the second half of 2008, with leading indicators like the labor market still pointing down, credit remaining tight, and household-debt loads maintaining at especially high levels. We forecasted that the DOW could remain under pressure during the course of the month, and projected a trading range of between 10,600 and 11,800. The actual result saw the DOW remain under pressure, with a trading range for the month between 10,365 and 11,790 -- a very accurate forecast.

We stated that the US dollar recent rally remains a manifestation of broadening economic weakness outside of the US, rather than strength at home. We anticipated that the US dollar rally could continue, as a currency of renewed safe-heaven choice, with global economies slowing, and projected a euro fx equivalent trading range for the month between $1.38 and $1.46. The actual result saw the US dollar remain supported, with a euro fx equivalent trading range for the month between $1.3821 and $1.4780 -- a very accurate forecast.

The US treasuries were anticipated to remain a global safe-heaven during the course of the month, and we projected a peak yield for the US 10-year Note at 3.90%. The actual result saw the US treasuries rally in price, as yield inversely declined, producing a yield range for the month between 3.57% and 4.07% -- a fairly accurate forecast.